BRAZIL Law and Practice Contributed by: Thaís Vasconcellos de Sá, Bermudes Advogados
Frameworks for Individual Indemnification If there are impacts on or damages caused to third parties, the company should also consider implementing a framework for indemnification of these individual damages. Such framework should involve: • creating a list of the damages caused and parameters to calculate indemnification, usu- ally construed with the support of external specialised consultants and resulting from negotiations with the relevant authorities from the public defender’s office, if low-income individuals were affected; • establishing channels to receive and treat these demands, including with offices in each of the affected territories; and • engaging external law firms to represent the company in the negotiations with the affected individuals (which should be legally repre- sented by the public defenders or their own counsel, with costs usually covered by the company in the case of the latter), as well as consultants to help mediate these discus- sions. This framework for individual indemnification should ensure that these individual damages are treated consistently by the company, and should avoid accusations of injustice or unequal treat- ment. As the public prosecutors in Brazil also have the competence to demand homogene- ous individual damages in court via public civil actions, it is advisable that the framework be recognised as adequate by the public prosecu- tor’s offices as well – this can be done via its inclusion in a broader settlement agreement (that deals with all damages caused by the event) with all competent authorities.
Agreements for Administrative and Criminal Liabilities Finally, paths are also available for agreements to resolve administrative liability, under specific conditions according to the underlying legal implications of the crisis. As for potential crimi- nal liability, given that most criminal implications could also affect individuals/executives related to the company, it is also important to consider the implications of an eventual agreement on that front regarding the potential liability of these individuals. Agreements With Creditors for Financial Restructuring Most crises will severely affect a company’s financial prospects, either by imposing new (significant) costs related to the crisis and/or impacting on the company’s ability to continue its activities without any disruption. A crisis aris- ing from an industrial accident, for example, can lead to the interruption of the company’s activi- ties due to technical issues or material impair- ments, as well as to measures being taken by the Brazilian authorities to suspend the company’s licences and authorisations. While the latter can be dealt with via agreements with the competent authorities and specific proceedings to correct/ readjust the licences and obtain new authorisa- tions (which will underly measures to be taken by the company in that regard), the impacts of these measures on the company’s ability to maintain cash flow and observe its financial commitments will also need to be addressed. The Brazilian legal system provides alternatives for collective renegotiation of debts with credi- tors, either in court (via judicial restructuring) or out of court (extrajudicial restructuring), under specific circumstances.
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